New VAT measures to net in extra Tk 11,228cr

Jasim Uddin | Published: 21:43, Jun 07,2017

 
 

A file photo shows a customer selecting a product at a super shop in Dhaka. The National Board of Revenue has made a projection of generating around Tk 11,228 crore in value-added tax through budgetary measures in the coming fiscal year 2017-18 including implementation of the new VAT law. — New Age photo

The National Board of Revenue has made a projection of generating around Tk 11,228 crore in value-added tax through budgetary measures in the coming fiscal year 2017-18 including implementation of the new VAT law.
The revenue board, however, estimated that its collection through VAT would be Tk 8,435 crore less due to some of the proposed budgetary steps under the new VAT and Supplementary Duty Act-2012 which will come into force from July 1 this year.
The ‘loss’ will be incurred because of the hike in the annual turnover limit to Tk 1.50 crore from Tk 80 lakh for imposing turnover tax and hike in VAT-free annual turnover for small businesses.
The NBR has already placed the provisional estimation to the government high-ups.
According to the provisional estimate of the revenue board, it may generate additional Tk 4,700 crore through implementing 15 per cent single VAT rate for all goods and services, except essential products under the new budget through withdrawing existing tariff value and truncated VAT system.
The revenue board may generate additional Tk 2,500 crore because of withdrawal of tariff value based VAT facility for some sectors like MS products, paper, river vessel, transformer, tissue
and bricks which would pay VAT at reduced rates based on tariff value fixed by the NBR.
Another Tk 1,200 will come from sectors like construction agency, supplier, land and building developers because of withdrawal of truncated multiple VAT rates system and implementation standard VAT rate for the sectors.
The tax authority may also mobilise another Tk 1,000 crore as it withdrew VAT exemption for some sectors like various types of fabrics, electricity, plastic, aluminum products, passenger bus and several types of MS products.
These sectors will now have to pay VAT at 15 per cent.
The NBR will get additional Tk 6,528 crore from the tobacco sector due to upward changes in prices and supplementary duty rates for cigarette, bidi and other tobacco products.
Officials of the revenue board said that they were expecting additional Tk 500-Tk600 crore from excise duty on bank accounts as the government proposed to hike the duty at various rates on bank balance above Tk 1 lakh.
Currently, the NBR gets around Tk 1,200 crore as excise duty from bank accounts.
According to the NBR analysis, it may get additional Tk 10,353 crore in VAT in the fiscal year because of introduction of VAT online system and intensifying monitoring, enhancing alternative dispute resolution for arrear collection as well as reducing tax gap.
Officials said that introduction of online system would improve tax compliance and prevent scopes of tax evasion.
The tax authorities expect a 12.5 per cent natural growth in VAT collection which will bring additional Tk 8,305 crore in the fiscal year.
The government has set VAT collection target at Tk 87,887 crore for the coming FY 2017-18, Tk 21,451 crore up from the revised VAT collection target at Tk 66,000 crore for the outgoing FY 2016-2017.
The original VAT collection target was Tk 74,114 crore for the FY 2017.
The government set the highest target for the VAT wing among its three wings---VAT, income tax and customs. 

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